The Retail Lag
Posted: July 2, 2012
The Wall Street Journal reported on July 2, 2012, that consumers are not spending enough to boost the recovery. But the story touches on a larger trend that may also explain why your kids struggle to find summer jobs and some college grads can’t jump start their working careers.
The retail sector simply isn’t what it used to be.
Since 2003, gross business income for all private companies in Washington grew by 50% to more than $600 billion, led in part by 82% growth in manufacturing revenue. But the retail sector grew by just 36% during the same time period to $112 billion. The reports come from the Washington State Department of Revenue.
Retail job growth was also sub par during the decade, with 3.6% employment growth to 316,000 while overall private jobs outside the farm belt grew by 8% to more than 2.8 million.
State population grew by about 14% during this period. So, potentially, there are now more people for each job opening, including those that can be found behind brooms and cash registers at local stores.
And, at least in terms of revenue, you can’t blame the internet. E-commerce was folded into overall retail revenues by the federal government in 2003 and ever since then those numbers have been included in state retail totals.
Not all retail sectors are lagging. Revenues for general merchandise stores grew 107% over the past decade to $17.6 billion with growth every year since 2003. That category includes big box retail and excludes department stores.
Grocery store revenues grew by only 26% to $14.5 billion, but the grocery sector posted growth every year but one in spite of the recession.
Major categories hit worst by the recession include those that sell cars, trucks and building materials. Motor vehicle sales were $18 billion in 2012, but that was still below the 2007 peak of more than $20 billion. Stores selling building materials are also down, with sales of $6.3 billion compared to $8.4 billion in 2011.
So, we’re still building and spending less. Hopefully, part of the lag is because so many of us with jobs are also saving more.
Closer to home there are also signs that retail hope springs eternal.
According to state records, the number of retail stores in the City of Seattle grew each and every year since 2000, rising from about 7,500 to 12,000. That’s a robust growth rate of 60%. But how many specialty shops do we need for high end pet care products and personal passions? We'll soon find out.
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